Performance Bond

This type of bond commits the surety to ensuring that the physical works specified in the contract bonded is completed and turned over to the owner in a finished state. It does not commit the surety to any payment obligations in respect of suppliers of materials to be used for the contract work. The surety only becomes liable when the contract is not properly completed or when the work is not done at all. It can therefore be seen as a guarantee of good performance.

It is pertinent to say here that before insurance company can guarantee any contractor of good performance he must be very sure of the ability of the contractor to do the work.

One of the ways of knowing this however is to call for evidence of past performance. This can be in form of certificate of satisfactory completion of project issued to the contractor by past employers for whom he has executed similar projects. Unfortunately, because of the stiff competition in the market, this is rarely done.